Sterling fell more than half a percent to one-week lows against the euro on Thursday on news of steady UK rates and weak output data.
The Bank of England left interest rates unchanged at 4.5 percent as expected, but economists polled by Reuters last week saw a further UK interest rate cut in either November or February, following a quarter-point cut in August.
British industrial output unexpectedly fell at its sharpest pace in five months in August, data showed on Thursday, suggesting the sector could significantly cut overall GDP growth in the third quarter.
"The data does confirm weakness in the UK economy and we are likely to see sterling weakness probably emphasised against the euro - euro/sterling seems ready to move up to the 68.55 area," said Ian Stannard, currency strategist at BNP Paribas.
"It will be interesting to watch the minutes when they come out to see if there's any increased dovishness or if the possibility of rate cuts is discussed at all."
Sterling weakened as far as 68.42 pence and was trading close to those levels at 1410 GMT.
The pound was at $1.7745, up two thirds of a percent on the day against the dollar, but lagging the euro's sharp rise versus the US currency after hawkish comments from European Central Bank President Jean-Claude Trichet and worries that the dollar's recent rally may be overdone.
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